12/30/2010 1:42:00 PM by Traci DeLore
WASHINGTON - A number of small businesses, including family farms, could be forced into diverting resources into measures to minimize the newly reinstated estate tax instead of using that money to grow their business, according to a new study published by the American Family Business Foundation.
The report found that up to 67 percent of estates subject to the estate tax in 2011 would own more small business assets if not for the tax.
Under a tax plan signed into law just before Christmas, the government will reinstate the estate tax at a rate of 35 percent, with a $5 million exemption. While nearly 200,000 total U.S. households' net wealth will exceed the $5 million threshold and could pay if the owner dies, the report predicted that nearly 10,000 households will actually pay estate taxes in 2011, based on age and assuming a 5 percent mortality rate.
The problem, the report stated, is that small business owners will need to divert resources toward preparing for the impact of the estate tax, which means they are using fewer resources to grow their businesses and create jobs.
The American Family Business Institute is a Washington, D.C.-based trade association of family business owners and farmers who oppose the estate tax and are working towards its permanent repeal.
Supporters of the estate tax have their own arguments.
The tax will result in billions of dollars of revenue and repealing it permanently would increase the national debt, according to Citizens for Tax Justice, a nonprofit research and advocacy group that focuses on tax policies.
Contact DeLore at tgregory@tmvbj.com